Analyzing Federal Realty Investment Trust (FRT) and Duke Realty (DRE)

Federal Realty Investment Trust (NYSE:FRT) and Duke Realty (NYSE:DRE) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, dividends and valuation.

Dividends

Federal Realty Investment Trust pays an annual dividend of $4.08 per share and has a dividend yield of 3.1%. Duke Realty pays an annual dividend of $0.86 per share and has a dividend yield of 2.8%. Federal Realty Investment Trust pays out 65.5% of its earnings in the form of a dividend. Duke Realty pays out 64.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Federal Realty Investment Trust has raised its dividend for 51 consecutive years and Duke Realty has raised its dividend for 4 consecutive years. Federal Realty Investment Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings for Federal Realty Investment Trust and Duke Realty, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federal Realty Investment Trust 0 4 7 0 2.64
Duke Realty 0 4 8 0 2.67

Federal Realty Investment Trust presently has a consensus target price of $139.67, suggesting a potential upside of 5.45%. Duke Realty has a consensus target price of $35.78, suggesting a potential upside of 16.55%. Given Duke Realty’s stronger consensus rating and higher probable upside, analysts plainly believe Duke Realty is more favorable than Federal Realty Investment Trust.

Insider and Institutional Ownership

88.7% of Federal Realty Investment Trust shares are owned by institutional investors. Comparatively, 93.2% of Duke Realty shares are owned by institutional investors. 0.8% of Federal Realty Investment Trust shares are owned by company insiders. Comparatively, 0.3% of Duke Realty shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

Federal Realty Investment Trust has a beta of 0.49, meaning that its share price is 51% less volatile than the S&P 500. Comparatively, Duke Realty has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500.

Profitability

This table compares Federal Realty Investment Trust and Duke Realty’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Federal Realty Investment Trust 26.11% 10.53% 3.82%
Duke Realty 36.32% 7.37% 4.46%

Valuation and Earnings

This table compares Federal Realty Investment Trust and Duke Realty’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Federal Realty Investment Trust $915.44 million 10.84 $241.90 million $6.23 21.26
Duke Realty $947.87 million 11.64 $383.73 million $1.33 23.08

Duke Realty has higher revenue and earnings than Federal Realty Investment Trust. Federal Realty Investment Trust is trading at a lower price-to-earnings ratio than Duke Realty, indicating that it is currently the more affordable of the two stocks.

Summary

Duke Realty beats Federal Realty Investment Trust on 12 of the 17 factors compared between the two stocks.

Federal Realty Investment Trust Company Profile

Federal Realty is a recognized leader in the ownership, operation and redevelopment of high-quality retail based properties located primarily in major coastal markets from Washington, D.C. to Boston as well as San Francisco and Los Angeles. Founded in 1962, Federal Realty's mission is to deliver long term, sustainable growth through investing in densely populated, affluent communities where retail demand exceeds supply. Its expertise includes creating urban, mixed-use neighborhoods like Santana Row in San Jose, California, Pike & Rose in North Bethesda, Maryland and Assembly Row in Somerville, Massachusetts. These unique and vibrant environments that combine shopping, dining, living and working provide a destination experience valued by their respective communities. Federal Realty's 105 properties include approximately 3,000 tenants, in 24 million square feet, and over 2,600 residential units. Federal Realty has increased its quarterly dividends to its shareholders for 51 consecutive years, the longest record in the REIT industry. Federal Realty is an S&P 500 index member and its shares are traded on the NYSE under the symbol FRT.

Duke Realty Company Profile

Duke Realty Corporation owns and operates approximately 153 million rentable square feet of industrial assets in 20 major logistics markets. Duke Realty Corporation is publicly traded on the NYSE under the symbol DRE and is listed on the S&P 500 Index.

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